Umakanthan53
Labour Law & Hr Consultant
Karansrinet
Manager - Business Development

Dear Users

I work in a company which basically is a partnership firm providing its services in the IT Sector. We have been informed that the company is closing the business citing losses in operations. We have not been yet given a formal notice or any written confirmation. The company is in operation in Noida for the past 8 months while the head office in Jaipur is in operation for the past 2 years. We have not been paid salary for the previous month. We are terrified if they just disappear without remuneration of the 2 months salary. Also what compensation can we get in case of unemployment due to closure of the company or in case of shifting the operations to a new place(Jaipur) at which employees don't find comfortable to work. We don't know yet if the head office in Jaipur will remain operational or not. But our Head of Business Operations has warned us that the director will say that they are shifting the business operations to Jaipur if we go for legal proceedings.

Please advise me what legal procedures can we take. Please cite the laws and acts the company is in process of infringement by adopting this approach and what compensations and remuneration can we expect.

We will be grateful for all and any advice you can offer to us.

Regards
Karan
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Dear Karan,

No one can simply brush aside the employee's anxiety arising out of the apprehension that the Company might be closed soon on account of losses. But mere apprehension or suspicion can not take the place of proof. You have not mentioned the total no of employees of the whole company with the break-up details of the Noida unit. Had the company employed 100 or more workmen in total on an average in the preceeding 12 months, it has to obtain prior permission from the Appropriate Govt. before closing down. If the strength is less than 100 but 50 and more, the company has to issue 60 days notice under sec.25FFA of the Industrial Disputes Act,1947 before the date of actual closure. Since the age of the over-all establishment is just two years and the Noida unit is even less than a year, you can not expect a compensation even to make your both ends meet till you find alternative employment. Anyway, in order to send signals to the Management that there would be a legal fight from the side of employees in the event of closure of the unit under the guise of shifting the business operations elsewhere, raise a collective industrial dispute regarding some general demands inter alia non-payment of wages for the particular month through a Trade Union of which all the employees are members or a committee of 5 employees authorised by all before the area Conciliation Officer. Remember, such a move is not an exact remedy for the apprehended closure, but a preventive check against the management's sudden closure of the unit and may pave way for an amicable exit compensation.
Dear Umakanthan
The total no. of employees including both the offices are less than 100 but more than 50. But the employees in the Noida office are less than 20. However its not a mere suspicion. The building premises in which our office is located has been given a notice that they are vacating it from the next month. That's how we came to know about it in the first place. Once we confirmed it with our business head, we were notified verbally to start searching for alternate employment options. But the directors are yet to say a word on the situation. They have kept the business head on front to communicate with us and are not even responding to our calls and emails. We have not received the salary for the month of august yet. We have worked for 20 days in september too. The employees are afraid that if they don't come to the office the employers will cite a reason of absence to fire us from the job. Its been a mental trauma for us from the past few days.
Regards
Karan
Dear Karan,
Closure or retrenchment, whatever be the unilateral reason for your exit attributable on the part of the management, if the reason for such mishap is genuine and inevitable, you have to be content with just monetary compensation which is based on the continuous years of service you rendered. Your service would be just one year and as such whatever compensation based on which is not going to be adequate to your needs. So simultaneously try to seek alternative employment and try to get the pending salary. It is always better to jump out of a sinking ship before it gets drowned completely.
Dear Umakanthan
Thanks for the advice. Our main concern is the pending salary too. The way they are behaving its hard to believe if they have any intention of releasing the salary. 2 months salary is not a small amount which we can compromise. The only thing which is coming in our mind is to warn them to pay our dues or we will take legal actions. There can be two consequences if we use the hardball approach. The nice thing will be that they get scared and provide us our remaining salary. The worst case scenario will be that they will ignore our warnings and test our commitment if we have the guts to take the step.
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